By John Revill
ZURICH--Swisscom AG (SCMN.VX) Thursday said it expects its 2013
earnings to decline as it increases investment to upgrade its
mobile phone and internet network in Switzerland and at its Italian
subsidiary Fastweb.
"We think 2013 will be very much in line with 2012--stable
revenues with slightly lower EBITDA--because we need higher costs
for the ramp-up in infrastructure," Chief Executive Carsten
Schloter told The Wall Street Journal.
The telecoms operator expects operating profit of 4.25 billion
Swiss francs ($4.66 billion) in 2013, down from CHF4.38 billion in
2012.
Mr. Schloter said he expects earnings and sales to improve in
the longer term.
"We expect growth in the horizon of three years and we will see
that," he said. "This level of capital expenditure will not stay
the same for the next 20 years."
He was speaking as Swisscom reported earnings slightly ahead of
expectations. Annual net profit attributable to shareholders rose
156% to 1.76 billion Swiss francs, while annual revenue fell 0.7%
to CHF11.38 billion.
Like many telecoms operators, Swisscom has been battling
declining revenues as mobile phone users move to cheaper flat- rate
tariffs and bundled contracts which combine home internet, TV and
fixed-telephone services.
Swisscom's capital expenditure will increase to CHF2.4 billion
from CHF1.99 billion in 2012 as the company expands its high-speed
internet network across Switzerland.
As a result, the company, which is majority owned by the Swiss
government, said it will hold its 2012 and 2013 dividend at CHF22,
same as 2011. Mr. Schloter said this isn't a sign that Swisscom
doesn't believe in the future.
If that were the case, he said, "we would cut our dividend as
many other operators have done."
"Maintaining a stable dividend which has a yield of 6% in
today's interest world is phenomenal," he added.
Write to john.revill@dowjones.com
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